Although Germany’s gas storage level reached 100 percent last week, Europe’s largest economy is still struggling to achieve long-term energy independence following decades of heavy reliance on imports.
German Minister for Economic Affairs and Climate Action Robert Habeck called this a “mistake” by previous administrations and now the country is facing the immediate challenge of sourcing sufficient fuel to avoid blackouts during winter.
In the long term, however, Germany will have to conclude multiple new energy partnerships and achieve energy independence by investing in renewables.
HIT BY ENERGY CRISIS
A large net importer of energy with 70 percent coming from imports of fossil fuels and uranium, Germany was particularly hit by the energy crisis in Europe. At the start of 2022, Russia still provided Germany with more than half its supplies of hard coal and natural gas along with 34 percent of oil supplies.
After gas supplies from Russia to Europe through the crucial Nord Stream 1 pipeline were already cut at the beginning of September, both Nord Stream 1 and 2 were damaged and rendered inoperable by a series of explosions that caused underwater gas leaks in late September 2022.
Due to the “greater uncertainty amid the current situation,” Germany’s largest energy supplier, E.ON, further cut the value of its stake in Nord Stream 1. The company’s 15.5 percent stake was devalued to only 100 million euros (103 million U.S. dollars), down from 0.5 billion euros at the end of June.
Having declared ‘Level 2: Alert level’ of the gas emergency plan, the Bundesnetzagentur (BNetzA), the German regulatory office with responsibility for electricity and gas, has been busy safeguarding gas supplies ahead of the winter and storages are now full.
As part of the energy-saving measures, minimum room temperatures were lowered, monuments are no longer illuminated, and the country’s one million private swimming pools and whirlpools will have to remain unheated during winter. The BNetzA stressed the need to cut consumption by at least 20 percent.
INEVITABLE POLICY U-TURNS
Before this energy brinkmanship came into play, Germany had the stated aim of phasing out coal-fired power plants by 2030 and decommissioning all nuclear power plants by the end of 2022. However, the government had to make a U-turn on nuclear and coal-fired power stations to protect its energy supplies and address an immediate shortfall.
Following internal wranglings within the government coalition, Chancellor Olaf Scholz stepped in and allowed all three German nuclear plants to continue generating electricity over the winter until April 15, 2023.
While there have been short-term successes in storing gas, Germany is looking elsewhere to shore up gas supplies to end its energy dependency. In order to diversify imports, Habeck quickly entered into discussions on gas supply with Norway, Canada and the United States.
Germany has also signaled its interest in discussing a natural gas pact with the United Kingdom (UK) with a view to including a mutual bail-out clause in the event of shortages during an extreme cold snap. The UK’s long coastline is a “geographic advantage when it comes to infrastructure for importing liquefied natural gas (LNG),” BNetzA head Klaus Mueller has recently told The Guardian.
INDEPENDENCE THROUGH RENEWABLES
The lifetime extension of coal-fired and nuclear power plants could be considered a setback to Germany’s environmental plans. Habeck, however, now considers an accelerated expansion of renewable energy capacity as a vital tool in achieving energy independence as well as climate protection.
As the share of renewables is rising, Germany will reduce its need for energy imports. The government is aiming to cover all of the country’s electricity needs with renewables by 2035, five years ahead of the original target. Already by 2030, the share of wind and solar energy is to roughly double from current levels to 80 percent.
All these plans, however, are of little help today.
Although gas storage facilities are now full and Germany has security of supply deals in place across the European Union (EU), an extreme cold snap would test the public’s resolve to reduce energy consumption. Blackouts could be avoided but the supply situation remains “extremely tense,” German power transmission grid operator Amprion said.
With the destruction of sections of the Nord Stream pipelines it is clear that the country will not have the option to return to its historic energy structure. Until renewables are ready, diversifying energy supplies will become an increasingly pressing issue. (1 euro = 1.03 U.S. dollars)